A JLL – Smartworks joint report predicts that India’s operational flex stock will reach 106 mn sq ft, doubling again over the next five years. The country’s operational flex stock has risen to 53 mn sq ft across the top seven cities, occupying around ~839,250 seats. This equates to an overall office stock penetration level of around 4.7%, making it among the fastest-growing flex markets globally.
Enterprises cutting across origin, scale, and industry segments are looking to integrate flex in their portfolios, from housing their flagship offices to high-end R&D teams and business functions. Notably, the space taken up by enterprises (converted to per seat basis) in flex has risen by 3.2X from FY21 to FY 23, to a record-high number. Further, the enterprise seat take-up recorded in FY 2023 is higher compared to the combined FY 2021 & FY 2022 numbers. Bengaluru, Pune, and Delhi NCR have been the three biggest markets during the past three financial years, combining for a ~ 60% share of all enterprise seats taken up during that period.
Pure-play managed space providers have been the drivers of the flex resurgence post-COVID, seeing their share grow by 3.4X over the same period. The managed space operators have seen their operational footprint grow by 10X to ~15 mn sq ft till March 2023 compared to 2018. However, hybrid players still hold the largest share, accounting for a substantial 44.2% of the operational flex stock.
Bengaluru leads the overall operational flex stock, accounting for a ~39% share on average since 2018, followed by Delhi NCR with an average share of ~17%. Over the same period, Hyderabad and Pune have displaced Mumbai in terms of the next highest flex stock across the top 7 cities. Pune has witnessed the maximum CAGR growth of 49% since 2018 followed by Hyderabad (40%), Chennai, and Delhi NCR (30%).
The JLL-Smartworks report finds that the flex story in tier 2 cities is gaining definite momentum. Business continuity has emerged as the biggest driver for respondents looking at tier 2 cities as part of their growth and geographic diversification plans. Lower operational costs, workforce mobility, and talent retention are top parameters to explore opportunities for flex spaces in tier 2 cities
It further highlights that sustainability has become a key criterion when choosing workspaces, particularly among the larger occupier segments. As sustainability becomes imperative for space selection, occupiers want to imbibe green building certifications as a part of their ESG goals. The share of space leased in green-certified buildings by flex operators rose to 51% in the 2021-Q1 2023 period compared to just 28% in the preceding period of 2019-2020.
The report suggests that flex operators can help support building investors and landlords in layering services that deliver a personal and memorable experience which aids in tenant management, better revenues and higher occupancy, and in turn better valuation.
